Medicare paid millions in bonuses to ineligible doctors

By Terri Langford :
April 22, 2012
: Updated: April 22, 2012 11:39pm

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The incentive for doctors aims to bring them to medically underserved areas, such as the South Texas border.

Medicare paid physicians millions of dollars in bonuses to treat the medically needy in parts of Texas and across the country, though many doctors no longer qualified for the cash and federal officials knew it, a Houston Chronicle investigation has found.

Documents show primary care physicians in Hidalgo County were overpaid $64 million from 2003 until last year.

Doctors at 31 other Texas locations, including parts of San Antonio and North Central Bexar County, also received a still-undetermined amount in bonuses for providing medical and mental health care.

Nationally, $33 million in unwarranted bonuses were paid by Medicare in 2010 alone, federal officials concede.

Under a little-known federal incentive, primary care doctors who work in communities short of health care options qualify for a 10 percent bonus for each Medicare claim they file.

The Center for Medicare and Medicaid Services has paid the bonus to lure doctors to rural and poorer areas of the United States, dubbed Health Professional Shortage Areas.

But records reviewed by the Chronicle show that the federal Health Resources and Services Administration, responsible for updating and publishing the lists of who qualifies for the list and who doesn't, failed to adjust its list of doctor shortage areas from 2003 until November 2011.

At least 311 HPSAs in the country have since been eliminated by Health Resources and Services, but other than the 2010 estimate of overpayments, federal officials said they can't say how many millions more dollars were mistakenly paid through the doctor bonus system during the nearly 10-year gap.

Hidalgo County was red-flagged recently only because health care fraud investigators working in the area noted that “Fieldwork by special agents ... has revealed (HPSA) designations for areas no longer meeting the criteria,” according to a Sept. 26 memo from Daniel R. Levinson, the U.S. inspector general for Health and Human Services.

“While preparing to open a field office in McAllen, Texas, our agents immediately noted a high concentration of health care facilities,” he said.

Levinson's memo to Health and Human Services Deputy Secretary William Corr — the only public document obtained so far to mention a cost for the debacle in Texas — said his investigators calculated that Hidalgo County's primary care physicians were overpaid the $64 million because it had not been eliminated as it should have been in 2004 when the Texas Department of State Health Services notified the government that it no longer qualified.

He also noted that Hidalgo's physician shortage designation was based on the county's demographics in 1994.

Two months after Levinson's memo, HRSA eliminated the 311 areas that were continuing to receive bonuses, including Hidalgo. It was the first update since 2002.

“HRSA cannot speak to why this did not happen in the past, but what I can tell you is when the current HRSA administrator was made aware of the situation, she set the agency on a path and HRSA is now fully addressing the statutory requirement to publish a Federal Register Notice,” said Martin Kramer, the agency's spokesman.

The doctor bonus is one of several incentives to bring doctors to medically underserved areas, such as the South Texas border, where more people live without health insurance than almost anywhere else in the state.

Doctors also can apply for medical school loan forgiveness if they commit to working in an area with the greatest need for physicians.

“The 10 percent bonus is a significant benefit,” said Tom Banning, CEO of the Texas Academy of Family Physicians. “It's a good tool to have in the toolbox to try to get physicians into communities that have historically had a hard time recruiting doctors.”

Levinson's memo last year was not the first mention of health care dollars wasted because the federal government failed to keep tabs on HPSAs across the country.

Both HHS' inspector general's office and the General Accountability Office have cited the monitoring lapses of shortage areas as a problem in 2006, 2005 and as far back as 1996.

“I get the idea of the shortage area. It helps attract quality physicians” said Tim Menke, the Dallas-based senior adviser for investigations at the Health and Human Services office of inspector general.

But failing to re-evaluate in a timely fashion adds to the waste of taxpayer-funded health care money in areas such as Hidalgo where health care fraud is prevalent, Menke said.

“We've got data that shows the fraud indicators are off the chart in the entire Hidalgo area,” he said.